Is My 401K or IRA Safe In Bankruptcy?

Yes.  In most cases a true retirement account is “exempt” from the assets that must be included in the bankruptcy estate and disbursed to creditors.  However, please make sure that your retirement account is a true IRA or federally protected tax-deferred account, and not simply a brokerage account you have set up and refer to as your retirement nest egg.   These set-aside accounts are not tax advantaged and are NOT protected in bankruptcy.

            Complex state and federal laws govern the retirement account systems and their protection scheme under federal bankruptcy laws.   Details like how long you have lived in Georgia and even a case pending before the US Supreme Court (as of the writing of this blog) can impact how safe your retirement funds are from creditors.  Because your future is at stake, I recommend consulting my law firm for a free consultation before filing a bankruptcy case.

What is a Reaffirmation Agreement?

       In Chapter 7 Bankruptcy, a client has a choice to make about secured debts, usually his or her car loans and mortgages.    “Do I keep them or walk away?”

The process to keep a debt and have it survive a Bankruptcy is called “reaffirming a debt” by signing a so-called Reaffirmation Agreement.  This is a voluntary agreement that must be signed by both the debtor and the creditor.

A reaffirmation agreement is essentially a waiver.  It tells the judge the following:  “Even though I am in Bankruptcy and I could walk away from this debt and never pay a single dime, I am electing NOT to do that.  Instead, I am telling the whole world that I like this debt and intend to pay it back so that I can keep my car forever.  I understand that I must pay this debt on time and in full even if the car breaks down or if I lose my job, and I cannot go back and file another Bankruptcy if I change my mind.  I understand that by signing it, I stand to lose my car and a future lawsuit for money if I ever miss a payment.”

Because a Reaffirmation Agreement is so serious, I recommend a visit with an attorney to discuss this option and what it entails.  In many cases we assists clients in Chapter 7 Bankruptcies with strategies to retain their cars while avoiding signing a reaffirmation agreement.

How Do I File Chapter 7 Bankruptcy?

Filing bankruptcy requires a short form, a small filing fee, and a certificate of credit counseling class (usually obtained online).  It does not even require an attorney.   

Filing a SUCCESSFUL bankruptcy is another story.   The bankruptcy laws are complex and the court system is designed for those who understand how to navigate them.  Many bankruptcies involve cars that require mechanics to maintain them.   The bankruptcy is no different.  If you would not fix your own engine or suspension system, why then would you file your own bankruptcy?  The risk of losing your car, home or livelihood is simply too great.

But our work has only begun.  As your lawyers it is us, not you, who handle the subsequent negotiations with creditors, trustees and judges.  Our goal is allow you to relax while we handle jump all legal hurdles to your bankruptcy discharge.  Though the law allows a client to file his or her own petition, those petitions are unlikely to get the relief desired, and usually end up dismissed with a loss of filing fee.  Give us a call so we can better explain not how you CAN file bankruptcy, but rather how and why you SHOULD file with the Slomka Law Firm.

Many law firms will meet a client and file the case within an hour.  At the Slomka Law Firm, we CAN act that fast when required, but we choose not to.  We prefer to meet first in a casual informative FREE initial consultation.  This first meeting is designed to form a blueprint for the options and future bankruptcy filing.   After a client engages us to represent them, we usually meet a second time to review papers, background, paystubs, letters, invoices, taxes and the like to prepare a complete and accurate bankruptcy petition.   Finally, we usually meet a third time to review every page and sign the complete and accurate petition.

Can I Keep My Car In Bankruptcy?

Can I Keep My Car In Bankruptcy?

Cars can be kept in all forms of bankruptcy, but it takes careful planning and legal advice to accomplish this. If your car is already repossessed, then we can get it back, but we must act quickly. In most cases, there is a strict ten-day deadline to file a bankruptcy: after that, you may not be able to regain your car.

If you still have possession of your car, then we can sometimes use the benefits of a Chapter 13 bankruptcy to lower your monthly payments. We do this through three ways: First, in certain cases we are able to lower your debt from the higher balance owed down to the lower fair market value of the car. This so-called “cram down” is a huge benefit of Chapter 13 bankruptcy. Secondly, we can lower your interest rate. And finally, we can stretch your remaining payments over a longer term to further reduce the monthly cost to you. Chapter 13 cases are complex and always require careful legal advice before and during the case.

In a Chapter 7 case, you can keep the car, but you must continue to make car payments. The main advantage here is the if you choose to walk away from the car, either now or at any time in the future, you may do so, without the fear of a large deficiency or a subsequent collection lawsuit.

Cars and bankruptcies are complex. At the Slomka Law Firm we can help you make the right choices for your unique situation. 

How Do I Stop Foreclosure

How Do I Stop Foreclosure?

            Foreclosure is stopped by filing either a Chapter 7 or Chapter 13 Bankruptcy.  At the Slomka Law Firm, we evaluate all options for clients facing foreclosure, and recommend the most effective and appropriate legal options.  In MOST cases, clients who are behind on their mortgages and desire to keep the home should file a Chapter 13 repayment plan.    This plan allows you to stop the foreclosure, move forward with the mortgage (paying monthly of course), and freeze the arrearage with no penalties or interest.   The arrearage is then paid very slowly, over 3-5 years, by paying a monthly plan payment to the trustee.  The trustee will also use these funds to pay other secured debts you may have (like a car loan) and the fees and costs associated with a Chapter 13 Bankruptcy.

            Chapter 7 Bankruptcy is a better option for clients facing foreclosure who desire to walk away from the home and the debt.  If your home is worth far less than your loan balance, or if you owe many past payments, this option may be worth considering.

            A final word:  Do NOT ignore foreclosure notices merely because you are in loan modification discussions with your lender.   All of the tools at your disposal become meaningless one minute after foreclosure,  Come see us at the Slomka Law Firm and we will give you solid advice at a free initial consultation.